TaxTMI 
TaxTMI 
2021 (8) TMI 633
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.... (i) Assessee's prayer regarding inclusion of Crystal Voxx Limited in the final list of comparable companies with respect of ITES segment (ground No. 4.7); (ii) Assessee's submission that negative working capital adjustment should not be allowed (ground No. 4.9). 2. The ITAT vide its order dated 06.08.2020 in MP No. 59/Bang/2020 recalled the order in ITA No. 185/Bang/2018 for the limited purpose of adjudicating the above two issues. Accordingly, this case was heard on 09.08.2021. We shall adjudicate the above issues as under. Assessee's prayer regarding inclusion of Crystal Voxx Limited in the final list of comparable companies with respect of ITES segment (ground No. 4.7) 3. The learned AR submitted t....
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.... reasons given in Para 2.15 of its order i.e., for the reason that in the financial results, the Auditors have mentioned that this company was predominantly a Business Process Outsourcing (BPO) company and therefore this company cannot be said to be an ITES company. The learned counsel for the Assessee brought to our notice that in the very same note, the auditors have also mentioned that the only reportable segment was BPO. Therefore this company was a BPO company and the results of the BPO which is the only segment ought to have weighed in the mind of the TPO to include this company as a comparable company. 25. We have considered the submission of the learned counsel for the Assessee and are of the view that the plea raised by th....
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....the Hon'ble Tribunal in the case of E4E Business Solutions India Pvt. Ltd. (supra) reads as follow:- "12. The third issue is with regard to grant of negative working capital adjustment. Working capital adjustment is made for the time value of money lost when credit period is given to customers. It is the submission of the ld. counsel for the assessee in this case that the assessee is a captive unit which is entirely funded by the AE. The assessee has no borrowings and is fully compensated by the parent on a total cost plus. The assessee has no working capital risk-in other words, it is a risk-insulated service provider to the parent. The only customer of the company is its parent company. The ld. counsel for the assessee has re....
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....payable). Such differences are mainly caused due to differences in the terms of purchase and sale, levels of inventory etc. For example: If the business advances a trade credit of (say) 60 days, its cash gets locked up for 60 days and reduces the working capital. It will have to borrow from open market to meet its working capital requirement, and hence incur expenses. Similarly, if it avails of trade credit of 60 days, it has surplus cash at its disposal. It will need to borrow less money to fund operational requirements. Hence, working capital position affects the additional cost incurred by a business by way of interest on borrowing from the open market. Working capital adjustments seeks to adjust for the differences in time value of mone....